US crude resumes fall as investors seek safe havens
NEW YORK – US crude oil prices fell for a second straight day on Tuesday as worries about Greece and China’s stock market losses sparked an investor flight to safe havens, and technical selling threatened to push oil further into a bear market.
Also weighing on crude prices was Iran’s determination to seal a nuclear deal with global powers to bring more supply to the market and the restart of a key oil terminal in Libya.
US crude CLc1 has lost more than 8 percent since Thursday’s close for the sharpest two-day fall since end-November. It settled down 20 cents on Tuesday at $51.98 per barrel.
Brent LCOc1, the more globally-used crude benchmark, settled up 31 cents at $56.85.
Investors will be looking out for Wednesday’s crude stockpiles data from the US government to decide on direction ahead. Analysts polled by Reuters on Tuesday said they expected US crude stocks to have fallen by 700,000 barrels on the average last week. Industry group American Petroleum Institute will issue its own estimates on this at 4:30 p.m. EST.
“There has been a lot of money looking to pile into the short-side, and there have been an accumulation of different triggers to cue that over a short time,” said Paul Horsnell, head of commodities research at Standard Chartered in London.
“None of those work in isolation, but put them all together in a short period and they’ll do it. And after that, the technicals kick in to give a further push down.”
US crude is teetering toward a technical bear market. Its 17 percent drop since its May high of $62.58 is approaching the 20 percent selloff required from the last major peak to constitute a bear market.
More downside momentum could push US crude to test the six-year low of $42.03 set in mid-March, technical analysts said.
Investors fled to the relative safety of the dollar and US bonds as banks in Greece ran down to their last few days of cash after Greeks voted in a referendum to reject an international bailout. The dollar hit a five-week high, weakening demand for dollar-denominated commodities from users of other currencies.
Chinese equities extended their hemorrhage, ignoring a slew of support measures from Beijing.
While the US oil complex was mostly under pressure, gasoline RBc1 rallied 1.3 percent and ultra-low sulfur diesel HOc1 rose too, proving the fuel markets resilience amid the peak US summer driving season. – REUTERS